Experts Expect Slowdown In Cell-phone Sales Growth

February 28, 2005|By Terry Maxon The Dallas Morning News

This year, consumers will be able to buy cell phones that snap photos, shoot videos, play music, send and receive messages, keep track of appointments and people, play games, browse the Internet and display live television.

So what do most Americans do with their cell phones? They talk.

Industry analysts are predicting that the rate of growth in cell phone sales will slow in 2005. A primary reason: Most consumers won't feel compelled to replace their phones with ones offering new bells and improved whistles.

A consensus among analysts is that 2004 sales finished with around 630 million to 650 million units worldwide, up more than 20 percent from 2003's sales of about 510 million.

The guess is that 2005 sales will climb over 700 million. Research firm Gartner Inc. pegs 2005 sales at around 720 million phones, while another research firm, IDC, is predicting 703 million.

"We're looking for the market to take a deep breath in 2005," IDC analyst Alex Slawsby said. "Now, growth is still going to occur. I mean, 10 percent growth is still something, but it's nothing like we saw last year with growth of over 130 million units, a real significant change."

Lance Wilson, director of wireless research at ABI Research, said 2005's sales growth globally will depend to a great extent on the speed at which India and China expand their population of potential cell phone users.

"Every year more and more of those people move up into the context of what defines their middle class, and those people will be buying phones," Wilson said.

In much of the industrialized world, growth will be slower because "almost everybody has phones. The penetration rate is very, very high. What you have are people replacing phones with newer phones," Wilson said.